Fugro’s short term strategic objective is to restore profitability and returns in a stabilising oil and gas market following years of sharp decline, as a key step towards achieving our mid-term financial targets. At the same time we target continued growth in the building and infrastructure, renewables, power and nautical markets. 

A key element of the Building on Strength strategy launched in 2014 was the transformation of our organisation from local operating companies delivering separate services, into one that efficiently and cost effectively delivers on today’s client requirements for large, integrated, multi-disciplinary projects. We have successfully completed this transformation into a regionally managed organisation, offering geo-intelligence and asset integrity solutions from uniform business lines. The new organisation is also much more cost efficient, and provides the platform for driving growth in non-oil and gas related markets.

Key priorities 2018

  • Clients: improve commercial capabilities 
  • People: increase engagement, training, diversity 
  • Cash: cost discipline and positive cash flow 
  • Excellence: standardise and digitalise services and work safely 
  • Innovation: launch commercially successful innovations
Key elements of Building on Strength strategy

In 2017, Fugro achieved its strategic objective of divesting its installation and construction related activities. On 30 November, Fugro finalised the divestment of its marine cable laying and trenching assets in exchange for a 23.6% interest in Global Marine Holdings (Global), a leading global supplier of subsea cable installation and maintenance services. Fugro now participates in a more diversified business in which cable installation services are complemented with long-term telecom cable and windfarm maintenance services and sales of subsea telecom systems. Fugro is the preferred provider of marine site characterisation and asset integrity services to Global. In addition, towards the end of the year we early terminated the long-term charter agreements for the two remaining installation and construction vessels. 

We continue to be open to reducing our stake in Seabed Geosolutions or enter into an extended partnership. Seabed Geosolutions expects to benefit from a growing seabed geophysical market focused on oil and gas development and production, its new Manta data acquisition system and the synergies with Fugro’s marine division regarding the efficient deployment of nodes using remotely operated vehicles.

In the offshore market, Fugro is global market leader in providing marine site characterisation services. We are particularly strong in frontier environments such as deep water. Market shares are high as we are an independent service provider and with our organisation, people and assets we can take on large, integrated projects; leverage our global footprint; and provide the full range of acquisition, analytics and advisory services. In the marine asset integrity space, Fugro holds strong regional positions in Asia-Pacific and Europe. On land, based on the same capabilities as in marine, Fugro is market leader in site characterisation on a regional and local basis, and in our ability to provide integrated services to globally operating clients anywhere in the world. In asset integrity we have leadership positions in specific market segments in selected countries.

Fugro’s market leadership is predicated on being an independent services provider. Fugro provides geo-intelligence and asset integrity solutions. Data, information and advice regarding natural resource development and sites for construction of large buildings, industrial plants and infrastructure are vital to costing, design and risk mitigation during the development phase and to mitigate development risk. As independent service provider, we have no conflict of interest with respect to other parties involved in clients’ projects and results are provided impartially and confidentially.

A further requirement to achieve and maintain market leadership is that we consistently meet client project requirements anywhere we operate. To achieve this we provide quality services that are delivered by well-trained people, safely, within budget, on time and meeting client specifications. In 2018 we will be paying particular attention to digitalisation of client deliverables and to introducing innovations that support our clients with solutions that deliver better results, enhance safety, and reduce overall cost of asset development and operation.

Fugro is constantly adjusting its organisation to better support its clients in managing their projects and operation of their assets in a sustainable, smart and cost effective way. Globalisation has been driving the demand for standardisation and increasing project complexity and cost reductions measures at clients driving demand for large, integrated projects. These demands could not be met with the local operating company model. Over the past years, Fugro has transformed to a centrally coordinated, regionally organised company that operates site characterisation and asset integrity business lines within both a marine division and a land division. Clients’ reactions on the new organisational set-up have been positive, as it has strengthened Fugro’s ability to more effectively provide standardised and integrated geo-intelligence and asset integrity solutions.

To further improve the organisation, Fugro is merging local entities into country organisations. This simplifies the organisation by reducing the number of legal entities.  In 2017, good progress was made and 50 legal entities were closed. In parallel, support functions are being merged into shared service centers, resulting in cost efficiencies and an improved service delivery. Shared service centres are now in operation in Fugro’s largest hubs in the USA, EU, Middle East, Asia and Australia. Rationalisation of the legal entity structure and implementation of the shared service centers will be largely finalised in 2018.

Engaged and talented employees are essential for any organisation to function well. Our purpose to contribute to a safe and liveable world, our market leading positions, solutions based on large multi-disciplinary projects, global footprint, and focus on innovation all contribute to creating an exciting work environment with many development opportunities.

Safety is a key priority. Much of our work is performed in challenging environments. Fugro is committed to keeping its employees and others involved in its operations safe by eliminating workplace hazards and preventing incidents. After years of improvement in safety performance, further improvement is stagnating, which is happening industry wide. Fugro is dedicated to further improve its safety performance and uses and promotes Fugro’s safety leadership programme to enable everyone to become a safety leader in their own workplace by encouraging peer-to-peer discussions, involvement, engagement and ownership of safety on the worksite. The programme is supported by key clients and is currently being rolled out across Fugro’s vessel fleet and other operations in the marine and land environments. The intent of the programme is achieving a step change in safety performance.

We support employee development with an array of tools including in-house training by the Fugro Academy. In the last two years we implemented a group wide talent identification programme which we are expanding in order to improve talent development on a group basis. This will include more attention to broadening diversity, which is important to Fugro.

A short term target is to improve employee engagement. We acknowledge that this is a challenge in a period that Fugro has been restructuring vigorously to deal with the oil and gas downturn. Since the start of 2015 Fugro has had to let go of around 3,500 employees or 25% of the total work force. In addition, the organisational transformation we have undertaken has meant significant change for a lot of people, even if the need for change has been widely appreciated and supported and people recognise it is creating good opportunities. We are addressing employee engagement vigourously, with groupwide communication supported by new group wide collaboration tools. In 2018 we will hold a group wide engagement survey.

Fugro’s leading market position is supported by its technology leadership. Fugro uses high-performance assets, equipment, technologies, software and business processes. Much is developed in-house through research and development, innovation and digitalisation programmes, complemented as needed or when advantageous by working with clients, suppliers, research institutes and universities. Our technology development and innovation capabilities are a core strength of Fugro and essential to being able to achieve our strategic objectives.  We will continue to invest in innovation, with an increasing focus on digitalisation.

Fugro has established a strong tradition in innovation since developing electric cone penetration testing in the 1960s. Other examples, such as the Starfix high accuracy global positioning system, our in-house designed and built remotely operated vehicles and fibre optic sensing tools demonstrate that Fugro continues to be an innovation leader in the markets in which it operates.

Digitalisation is becoming increasingly important as part of technology development and innovation. Clients are starting to embrace digital solutions to increase efficiency and reduce overall cost of development and operations. For Fugro it creates the opportunity to enhance delivery excellence by developing and offering client project deliverables in fully digital form. Fugro is spending a significant part of its development budget to support this trend. Examples are our cloud based, fully digital asset management solutions for roads, railways and power networks and solutions to provide remote operations offshore. Also internally we are benefiting from digitalisation of our processes.

Currently Fugro is most exposed to the oil and gas market, in which it generated 57% of its 2017 revenue.

Fugro is actively seeking to grow in the building and infrastructure, renewables, power, nautical and mining markets. In these markets we provide essential services that support our purpose by contributing to solutions to support a world with a growing, increasingly more affluent population and to mitigate the impact of climate change. In addition, it is desirable to have exposure across multiple markets that run in different cycles and to be active across the different phases of these markets to improve the overall sustainability of Fugro and the robustness of our performance.

In 2017, Fugro generated 43% of its revenue from non-oil and gas related markets, up from 34% in 2016. The majority of the shift is attributable to a 9% currency comparable organic growth in the markets outside oil and gas; the other part is due to the reduction of our oil and gas activities resulting from the downturn. Following good growth in its markets outside oil and gas in 2017, Fugro will strive for further growth in 2018.

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